Prices in China impact bottom line for concrete companies
Monday, January 3rd 2005, 6:02 am
By: News On 6
BENTONVILLE, Ark. (AP) _ To keep pace with the many construction projects in northwest Arkansas, Tulsa-based Mid-Continent Concrete Co. wants to expand its shop and office in Bentonville.
Business is good, but company officials say they would be naive not to consider what's happening in China and how that would affect their bottom line.
China is the No. 1 producer of cement, the primary ingredient of concrete. It's the third largest cement supplier to the United States, after Canada and Thailand.
And with a building boom in China, the country is keeping much of its cement powder instead of exporting it. So far, that's affected only U.S. coastal markets.
``I know that there's a building boom that's just of an incredible volume going on in the Bentonville area,'' said Jack Petreikis, executive vice president of Mid-Continent Concrete. ``But if you don't think on a worldwide market then you're somewhat naive.
``It boggles my mind to think of folks like us in Oklahoma and Arkansas being affected by what they're doing in Beijing for 2008 (the Olympics),'' he said.
According to the Illinois-based Portland Cement Association, which represents cement companies in the United States and Canada, growing Asian economies are straining worldwide cement capacity and shipping availability. An association survey says 35 states are experiencing shortages.
Art Paylor, a district sales manager with Ash Grove Cement Co., says China has influenced a lot of markets.
``It's really tied to supply and demand,'' Paylor said. ``Right now the economy's good and a lot's being built and prices have gone up some, yes.''
Bob Bivens, a Tulsa sales manager for Buzzi Unicem USA, an international cement company, said he expects the concrete industry to have at least another two to three years of prosperity.
``Until interest rates (rise), the residential construction's going to continue. Every forecast I see shows consistent four percent growth going forward,'' he said.
Most of northwest Arkansas' cement powder comes from plants in Foreman and in Oklahoma and Kansas. The region's building boom _ roads, bridges, and highways _ shows no signs of slowing down.
Mid-Continent Concrete has submitted plans to expand its shop and office at its 15-acre site in Bentonville. The company has 29 offices in Oklahoma and northwest Arkansas, and the Bentonville office serves as a dispatch center for Benton and Washington counties.